Platform or Application...Fish or Fowl?

Everybody claims to have a platform. But having a platform and being a platform company can be two very different things. To be clear, I am talking about "innovation platforms”. In his book The Business of Platforms, Michael Cusumano differentiates between transaction platforms and innovation platforms. Transaction platforms bring together different parties to conduct transactions just like Amazon, eBay, Über, AirBnB, and others do. Innovation platforms provide the foundation for a variety of technology applications.  

The innovation platforms deliver benefits such as greater engineering efficiency by providing a shared technology layer and the ability to customize the deployment for every enterprise.  But the ultimate prize is when the platform attracts other vendors who build their commercial applications on it. This way, the platform enables an ecosystem of partners who build applications that take the platform into new markets.  

A platform strategy is quite different from an application strategy. Platform vendors are courting applications, while application vendors compete with them. Yet, most application vendors claim to have a platform too. So, can they have their cake and eat it? Let’s take a look at a few examples: 

AWS  

AWS is decisively a platform company. As far as I know, they don’t build or sell any applications. AWS is clear in its strategy to attract developers from companies that build applications on it. AWS lives off that. And it lives pretty well. Those application companies are the AWS customers and AWS treats them as such. 

Apple 

Apple too is a platform company. Apple has not one, but multiple platforms including MacOS, iOS, and AppleTV. Apple also builds applications - from office applications such as Pages, Numbers, and Keynote to consumer entertainment applications such as Apple Music, Photos, and Apple TV+. Yet, Apple keeps all its platforms open to any competing application. They have no problem knowing that most MacBook users use Microsoft Office or Google Suite instead of Pages or Numbers. They also don’t make it at all difficult for their consumers to run Netflix or Spotify apps, even if those applications clearly compete with other parts of Apple’s business. That’s what platform vendors do.  

Salesforce 

Contrast that with Salesforce. Salesforce started as an application company but over the years, it developed a robust and widely used platform, Salesforce Platform. Yet when it comes to deciding between selling their applications and letting partners have their share of the deal, Salesforce sales reps never hesitate to push the partner under the bus. Just ask companies such as Conga, FinancialForce, or ServiceMax, companies that have built their business atop the Salesforce Platform but eventually ended up competing with Salesforce. Once Salesforce saw that there is a large enough market opportunity these vendors uncovered, it decided to build an application of its own. That’s not how a platform vendor operates. 

Microsoft 

Microsoft is a converted platform vendor. The company operated as an application company for decades, but since the Satya Nadella era, it appears to have shifted to a platform strategy. For years, Microsoft Office had a complete lock on the desktop productivity market and the company did everything it could to protect that franchise. Sure, Windows was the platform, but the big money was always in Office. In fact, Microsoft’s repeated failures in mobile computing can be directly traced to its strategy to defend MS Office at all costs. They tried, again and again, to squeeze the bloated Windows OS onto a smartphone in order to make it possible to run Office on the mobile devices. That strategy actually made a lot of sense, but it didn’t work. It took another 3 years after Stephen Elop’s “Burning Platform” memo before Satya Nadella took over as CEO and made Azure the primary focus of the company. Today, Azure makes billions for Microsoft and I am writing this article in a free version of Office 365, the cloud-based successor to MS Suite...on a Mac. Microsoft is finally behaving like a platform vendor.  

Oracle 

Oracle has gone through the opposite transformation as Microsoft. Oracle started as a platform vendor. Oracle Database was a platform upon which entire commercial applications were built. Back in the days when I was marketing on-premises software such as Documentum and OpenText, running on Oracle DB was a thing. Yet, Oracle started diversifying into applications back in early 2005. The biggest moves were the hostile take-over of PeopleSoft in 2005 and the introduction of Oracle EBS in 2007. Since then, Oracle was investing more and more into applications, and good for them, because as the cloud arrived, running on Oracle DB became less relevant. Today, Oracle is a full-fledged application player that competes with a myriad of other application vendors. 

 

IBM 

Eh, sorry...does IBM still make software? I have no idea. 

Google 

Google is probably the one company that looks like it is trying to be both. Google Chrome on the desktop, Android on the mobile device, and Google Cloud Platform are all legitimate platforms. At the same time, if anyone stole some business away from Microsoft Office, it’s Google. The Google Suite or Workspace as they call it now (so, 1990s) is becoming quite prevalent today. But in terms of strategy, Google is behaving like a platform vendor. Right now, I’m typing this article in Office 365 within Google Chrome and Google doesn’t seem to mind that at all. This is very different from when you tried to use a Windows version of WordPerfect or Lotus 1-2-3 back in the 1990s. And so, Google is a legit platform vendor. 

Stripe 

The supposedly hottest of the unicorns is at crossroads. Their payments infrastructure looks very much like a platform, powering payments for companies such as SAP, NetSuite, Salesforce, Zuora, and Aria. However, the moment Stripe introduced its own billing application, it effectively declared a war on all those companies. Sure, it will pretend for a while that they can all be friends, but ultimately, Stripe applications such as billing, invoicing, and spend management compete with the vendors that would want to use the Stripe payments infrastructure. That makes Stripe an application vendor, effectively abandoning its platform strategy.

  

Snowflake 

Here’s another beloved unicorn. Snowflake has been so far strictly following a classical platform strategy. Their data warehouse is under the hood of many commercial applications today. All those applications are taking Snowflake into places that Snowflake would have never ventured. Snowflake doesn’t offer any application of its own. Sure, they provide some tools and utilities such as data science and machine learning, data engineering, and cybersecurity, but those are never competing with the applications such as billing or fleet management that are taking advantage of Snowflake. Yes, Snowflake is a purebred platform company. 

Conclusion 

There are very few real platform companies. There might be many that claim to have a platform, but when it comes down to deciding between their immediate interest and the interest of their ecosystem, they are forced to show their true colors. Prioritizing the ecosystem over the short-term interests is a tough call to make for any software company. But those that dare to take that path earn the great prize. Just look at AWS, Apple, Microsoft, Google, and Snowflake – these platform companies are pursuing the platform strategy and killing it.  

Sure, you can be a very successful application company that doesn’t really care about being a platform. If you grow big enough, you may even attract an ecosystem of applications. Salesforce and Oracle are a good proof of that. But you can’t be both. You can’t pretend to have a platform company while competing with the companies that hitch their future to your platform. Yet that’s exactly what companies like Salesforce and Stripe do. 

The bottom line is that you can make a great, successful business out of being a platform or an application company. But you have to choose. 

 

They Should Be Business Tools

A few weeks ago, Google decided to quietly sunset Google Glass. They never said it publicly and in fact they might be considering another strategy for the device, but by all measures, Google Glass as we know it has failed. There are many theories for the reasons of this failure ranging from privacy concerns to the lack of social acceptance for walking around with geeky glasses. My theory is that the failure may be related more to the $1,500 price tag as consumer gadgets are simply not supposed to be that expensive.

Sergey Brin wearing Google Glass

That’s perhaps really the problem. Google Glass was certainly too expensive as a gadget for consumers but it likely wouldn’t have been too expensive as a business productivity tool. Most companies wouldn’t have a problem with the devices price, particularly with the customary volume discounts, if it demonstrated tangible benefits.

I can think of numerous business applications for Google Glass – from instructions while operating or repairing complex machinery, to patient records during surgery, to production data on the assembly line and supplier data in the warehouse.

But none of that was ever a priority apparently. Instead, Google put all their efforts into marketing Glass to consumers. The consumers may represent a greater opportunity in terms of volume but the enterprise market may represent a greater opportunity to optimize revenue. Just ask Microsoft.

There have been other technologies that I thought would have benefited from this strategy. Microsoft Kinect for Xbox comes to mind. While popular with gamers, the novelty of gaming via full body motion control is now wearing off. Let’s face it, most gamers want to shoot at aliens while sitting on their sofa and the Kinect is not the optimal weapon for that.

I would have hoped that we’d see Kinect being used in business – the repair technicians with oily hands reviewing designs, foremen at construction sites reviewing blue prints, surgeons with sterile hands reviewing patient records, farmers with dirty hands, lab technicians working in gloves – there are many use cases for gesture-based interaction.

When gestures are not practical, voice-based interaction might be appropriate. This is another technology that might have a greater application in the professional world than in the consumer space, at least given the current state of voice recognition. While the consumers relish in finding out the shortcomings of the still relatively new technologies such as Apple Siri or Amazon Echo, the business use cases may be more feasible. The business vocabulary is more precise and predictable, particularly in the given context. Professionals usually have to learn their business vocabulary as part of their job training and that makes it easier and less ambiguous.

Consumers usually resort to calling a company’s 800-number only after they failed to accomplish something online. At that point, we are exposing the already frustrated consumer to a voice recognition system that is far less mature than the web site and expect it to deliver a great experience. People usually don’t call in to do something that can be done with a smartphone app – like to check their account balance. In the business world, on the other hand, users are already trained to use a fairly precise language and their voice commands are usually in the context of a specific data set or business process.

“I need the Q3 revenue data for Europe broken down by product group” is much easier for a machine to understand and act upon than: “I want to buy a companion ticket for my spouse using my miles to match an already issued ticket purchased by my employer”. This relatively common task requires many additional data points - ticket number, flight numbers, account number, name and DOB of the traveler, seating preferences, credit card number, etc. – and that is very difficult for a voice-driven system to piece together.

Apple Watch. Yes, I want one!

A few weeks ago, Apple launched its new Watch. By all measures, it is already a success even though it won’t ship for another few days. The demo by the Apple team was very impressive and the press reviews are glowing. I have no doubt that the Apple Watch will become a success. But I wonder about the practical use cases of the Watch for consumers. So far, most wearable devices have focused on fitness but that market is very saturated already. The serious athletes will be hard to separate from their specialized Garmin, Timex, and Suunto watches. The hobby athletes are well served by the Fitbit, Jawbone, and Nike Fuel fitness trackers or they simply keep using their smartphones.

I can’t help but to wonder about the business use cases for the Apple Watch. There are many possibilities – approving process tasks, participating in simple collaboration activities, delivering business context-relevant information, etc. Smart watches are looking for a killer app and sharing your heartbeat is probably not it.  I suspect that we could find it sooner in business rather than the consumer space. 

Google Glass page on March 31, 2015

Welcome to the Internet of Things, Farewell Big Data!

Industry trends can be quite fickle. Sometimes, it is hard to explain when and why they quickly gain momentum and then, all of a sudden, they fade away just as fast. Last year at this time, the media was going all ga-ga about Big Data. Now, a couple of months into 2014, the Big Data buzz appears to be fading. It’s not gone, but certainly tired. But don’t worry, another buzz quickly took the pole position.

The new red-hot trend of 2014 is called the Internet of Things. The term is actually not that new. It was first coined by Kevin Ashton, the father of RFID, back in 2009. The idea behind the Internet of Things is that increasingly, all our devices, appliances, gadgets, cars, meters, and sensors will be connected to the Internet - offering new ways of control and a tremendous wealth of data to optimize our lives.

The term “The Internet of Things” initially received little attention outside a small circle of thought leaders. The mainstream media didn’t discovered it until this January when it became a big topic at the annual CES show in Las Vegas and then, out of the blue, mighty Google decided to purchase Nest for an eye-popping $3.2 billion! There is hardly a better example of an Internet-connected device today than the Nest thermostat.

Nest is a tremendously interesting company. I bought their smart thermostat about six months ago and I love the ability to remotely turn up the heat in our house when returning from a trip. Of course Google’s interest in Nest is not so much for my comfort as it is the data Nest collects today and might possibly collect in the future. For example, Nest knows not only how much energy I use on heating my house, it also knows whether I’m home or not. That information has value for advertisers!

 

That issue is increasingly the source of an intense debate. On the coattails of the still recent NSA spying scandal, the Internet of Things is perceived as a new threat to our security and privacy. As if it wasn’t enough that the NSA collects data about what I do online, now even my appliances will tell the NSA what I do at home, in my car, and in my office. And if the NSA can get to it, so can the hackers and other bad actors. Not an encouraging thought, really.

  

Yet as usual, the new technology promises a tremendous advance in our lifestyle and  productivity which seems to always trump consumer security and privacy concerns. The Internet of Things is coming and we can expect that before we know it, we will be surrounded by smart devices connected to the Internet. These devices will generate a lot of data which will be potentially very useful for predicting everything from product demand to energy shortages. Interestingly, this is exactly what Big Data was originally supposed to be about, before the term was hijacked to mean just about everything.

As we are weaning ourselves off of Big Data, the Big Data idea lives on in the form of the Internet of Things. The king is dead… Long live the King!     

Gesture Control in the Enterprise and the Consumerization Chasm

When Microsoft first shipped Kinect as an add-on for the XBox 360, I thought: “Wow, there is a new way to interact with information!” Sure, Kinect was designed for ‘full body gaming’ as Microsoft calls it but the ability to use gestures to find, access and view information seemed very promising. Ever since the 2002 hit movie Minority Report, we are yearning to work with information the way the Tom Cruise character did: using gestures.

The original - Steven Spielberg's Minority Report 

The use cases in the consumer space are primarily focused on gaming and the interaction with entertainment media. Using iTunes on AppleTV or Netflix on Xbox is great but, let’s face it, searching for movies using a remote control with no keyboard is a pain. Gestures could help with browsing the content while voice recognition could solve the typing problem.

Microsoft Kinect

The use cases in the enterprise, though, are far more promising. Just think about the surgeon with sterile hands who needs to flip through a series of X-rays, zoom in, start and pause a video recording from a echocardiograph, and quickly query a drug database. Think about the aircraft mechanic with oily hands who needs to access a repair manual for the latest model of a jet engine. How about the teachers explaining the latest material in front of a class of students? Or the speaker on stage using his hands instead of a geeky laser pointer...or instead of a fork lift like Al Gore did in The Inconvenient Truth? There are many possible professional uses for the gesture technology!

Yet, how come I don’t see any of this in the real life? Maybe Kinect isn’t good enough? Maybe it is sold only through the same stores that sell the gaming consoles and ignore the enterprise? Does Microsoft Marketing perhaps need help? There is a Kinect for the Windows web site promoting a software development kit (SDK) but there are no business examples featured on that site.

Google Glass, those hip looking glasses with a built-in computer screen (and a computer) have a similar potential in the enterprise. There are many professions that would greatly benefit from this kind of “always on display”. However, Google’s primary concern right now is making sure that a lot of celebrities get their picture taken with the Glass on their nose. They don’t even talk about business use cases. I worry now that Google will spend all its energy on devising schemes on how to push ads to people while they walk down the mall. Sure, we have seen that too in Minority Report but, honestly, that part of the movie sucked.

Google co-founder Sergey Brin wearing Google Glass

Microsoft Kinect, Google Glass, and other interactive devices such as the MYO wrist device or the Leap Motion Controller, combined with the Siri-like voice recognition are the future of computing. Touchscreen has its limitations. People have only so much tolerance for the small screen size of a smartphone - which is why the so-called phablets have become so popular. The interaction with a computer of the future will likely not involve fingers on glass but rather gestures, voice and perhaps even thoughts.

MYO is a gesture control armband

While using such interactive devices to browse movies is cool, using them in the enterprise can result in some really powerful benefits. Unfortunately, the leading vendors such as Google, Apple, and Microsoft are all chasing the consumers right now. Consumerization is hitting the enterprise but the vendors only think about the consumers and not about the enterprise. The innovation in enterprise computing is stagnating today and there is a chasm. And where there is a chasm, new opportunities open up for new entrants...